CEO Message

Delivering Value to Help Patients and Society with Our Corporate Purpose as the Core

Our Founding Purpose Carries through to Today and the Future

With three years now passed since we established our Corporate Purpose, the Company is setting course for deeper, broader awareness of the contributions we hope to make to patients and society. Our Purpose, “Lively Living for Everyone,” is meant to convey the Business Commitment we aim to ultimately achieve as a social mission that began 132 years ago with the passion of our founder, Jusha Tsumura, to create a meaningful business that contributes to the good of society both today and by extension 50 to 100 years from now. We have been able to show people within and outside the Company where we are heading and what kind of social value we have been offering as a corporation over many years, which means a lot, and I feel a fresh sense of pride in it.

That said, the act of spreading understanding of the Purpose through the organization alone will not lead to value creation. Metaphorically, if we are a mountain climber, deciding which mountain to climb and clearly understanding why is the Purpose, and imagining our resulting form at the summit is the Vision. We consider our route to the top as the span of a decade, with milestones every third or fourth year, which are our medium-term management plans. I believe that showing our route this way, stage by stage, helps our employees visualize the link between the job in front of them and the objective of the organization, monitor where they are in a three- to ten-year span relative to the summit, and be better motivated to overcome challenges and difficulties along the way.

Thoughts Behind Our Long-Term Management Vision

Under the title TSUMURA VISION “Cho-WA” 2031, we are working to fulfill the potential of our three Ps—personalized health care (PHC), pre-symptomatic disease and science (PDS), and potential-abilities development (PAD)—as we work to live in greater balance with nature and welcome an era in which we support well-being for every individual using the power of nature and science, mainly in traditional medicines, with Kampo and traditional Chinese medicines at the core.

The first step to realizing PHC and PDS is to fulfill our Corporate Mission “to contribute to the unparalleled medical therapeutic power of the combination of Kampo medicine and Western medicine,” which specifically means to standardize, spread, and scale up Kampo treatments. We first set a goal to increase the percentage of physicians who prescribe 10 or more prescription Kampo formulations based on Kampo medical theory to at least 50%, and achieved this goal in fiscal 2024. Our next step is to inspire more than half of physicians to prescribe “basic prescriptions for treatment areas” to help establish personalized Kampo treatment ultimately for every patient by fiscal 2031.

I predict that Kampo treatments will be updated more frequently than ever with the application of digital technology and data analysis methods, which have been making rapid progress. I believe we can accelerate the penetration of Kampo treatments in society by showing their efficacy with data that support scientific evidence. Tsumura is developing a Kampo diagnostic support system to promote personalized treatment with attention to the physical constitution and symptoms of each patient.

We have also begun working to establish ways to identify, diagnose, and treat the pre-symptomatic disorders unique to each patient. We believe we have a better chance of blocking the development of a disorder by interfering at the pre-symptomatic stage instead of waiting for the disease to develop before beginning treatment. Kampo medicine by nature puts priority on addressing a given disorder in the pre-symptomatic stage. Scientific elucidation of pre-symptomatic disorders is extremely challenging, but I firmly believe that Tsumura’s knowledge and Kampo formulations will hold major value for society in the near future.

Efforts to manage and improve our health by means of healthier habits and methods for preventing disorders, which includes diet, nutritious intake, exercise, sleep, and stress-management in daily life, are just as important as taking good medications. The Tsumura Group values an evidence-based approach in healthier habits and disease prevention as well, and we will promote products and services that will help realize a society in which people enjoy active and healthy longevity.

Creating New Value on the Strength of Core Competencies

Tradition is not just a sum of historical events, in my opinion, but rather it is borne out of innovation and passed down from one generation to another. The Tsumura Group undertakes innovative initiatives in the field of Kampo medicine, which is traditional medicine in Japan. At the same time, we maintain a firm commitment to refrain from entering into businesses that have nothing to do with Kampo or traditional Chinese medicines, or businesses that will likely make no sense after two or three years. We plan to continue investing management resources only in businesses we believe will create value for people both today and 100 years from now.

Our core competencies are in technology and expertise for drug formulation that allow us to produce high-quality pharmaceuticals of guaranteed safety, efficacy, and qualitative uniformity from natural sources, mainly plants. For sustainable growth, it is essential that we keep offering value that truly helps patients and society, making the most of our core competencies while keeping our feet firmly planted in prescription Kampo formulations, our core products. Based on this understanding, we are working to expand our areas of interest, such as operating a health and medicine business that includes traditional Chinese medicines and medicinal products based on crude drugs from China, as well as Yakushoku Dogen products, foods made with medicinal ingredients to maintain and promote health.

For Tsumura to drive the global market as a manufacturer of pharmaceuticals derived from natural substances, we must have our products meet global standards. To that end, we will exert a higher level of quality control for Group products and raise their quality to meet that of the synthesized products designated by the International Council for Harmonisation of Technical Requirements for Pharmaceuticals for Human Use (ICH) so we can establish a global competitive advantage.

We see major significance in business alliances and joint research with manufacturers of traditional Chinese medicines and medicinal products in China because they will help raise the quality of our medicines and products from natural ingredients to global standards, along with our Kampo products in Japan, leading to sustainable value creation in Japan, China, and the rest of the world.

In May 2025, the WHO Global Traditional Medicine Centre, founded in 2022 in India, invited me to attend a conference of the Technical Advisory Group on Building an Innovation Ecosystem for Public Health (TAG-BIEFPH) as a panelist. I could not attend due to a scheduling conflict, unfortunately, but I received a comment that Tsumura’s leadership in combining the healing power of Kampo and Western medicines, quality, sustainability, and commitment to innovation are exemplary, and that Tsumura’s original Kampo value chain and its vision to help maintain a well-balanced state among the mind, body, society, and nature will be a strong model for the future of traditional medicine worldwide. This told me that the group is strongly interested in our initiatives.

Further Reinforcing Our Business Foundation to Maximize the Organization’s Latent Power

Outlook for Our Second Medium-Term Management Plan and Progress in Addressing Strategic Challenges

Over the three years of our first medium-term management plan, we focused on digital transformation (DX) investment. Before the pandemic, MRs*1 met with physicians in person frequently to furnish information. The pandemic created opportunities for video streaming and web-based lectures, and the positive promotional results of those efforts were acknowledged, leading to greater DX investment. As a result, our infrastructure to visualize each physician’s need for Kampo-related information is solidifying. MR personnel are close to achieving their goal of doubling labor productivity.

Our current challenge is to promote DX throughout our Kampo value chain and more than double the productivity of our entire personnel base, including those in the crude-drug procurement and production segments. During the previous medium-term management plan, we developed technologies to automate production processes to save labor. In the second medium-term management plan, we are working to fully automate nighttime factory operations and build the foundations of a smart factory in the final year of our long-term management vision. Each year in Japan, Kampo formulations are prescribed to cover 1.7 billion patient days.*2 Because they are essential to healthcare practices, we are making reliable supply our top priority. To achieve this despite the surge in construction and equipment costs, we are executing appropriate investments without hesitation, applying target assessments by the Board of Directors based on internal standards for deciding whether to proceed.

Looking at our China business, and considering Chinese government moves to deregulate foreign investment, I can say that the environment is positive in 2025. Regarding our formulation platform, we have been considering entry into the market for traditional Chinese medicinal products since the first medium-term management plan, and intend to continue negotiating patiently and tenaciously with prospective local partners. As for our crude drug platform, we have recently made major progress, signing an equity transfer agreement in June 2025 with Shanghai Hongqiao Traditional Chinese Drug Pieces Co., Ltd., a leader in the drug piece industry.*3 I believe that the Tsumura Group’s crude drug procurement, quality control, production technology, and expertise are widely applicable to the traditional Chinese medicine business as characterized by its highly personalized traditional methodology.*4

• *1 Medical Representatives
• *2 Tsumura calculation based on the Ministry of Health, Labour and Welfare’s 9th NDB Open Data
• *3 Chopped crude drugs
• *4 Methodology for diagnosis and treatment methods in traditional Chinese medicine focusing on an overall analytical view of a given patient’s condition, choice of personalized treatment and traditional drug prescriptions

Shanghai Hongqiao Traditional Chinese Drug Pieces Co., Ltd.

Location: Shanghai, China
Established: 2003
Major business: Production and sale of drug pieces, mainly in the
Shanghai area
Equity: 51% owned by Tsumura China Inc. and 49% by Shanghai Hongqiao Pharmaceutical Co., Ltd.

Priorities in Cultivating Our Organizational Culture

Till about a decade ago, the Tsumura Group was a top-down organization. To promote our shift to bottom-up, the Company announced a new human capital policy under the catchphrase, “Tsumura, the People Company” in 2012, when I became CEO. As part of this initiative, I have been encouraging employees to take independent and autonomous action, making major changes in our HR systems and taking time to help employees shift their mindsets. In 2019, we established the Tsumura Academy to cultivate future executives and nurture our corporate culture. We added participatory programs on coaching, skill-building, and team-building to foster our organizational culture through dialogues in which employees work to achieve results in teams, contributing their individual skills and uniqueness, on top of pursuing their own respective personal growth.

The initiative to nurture our organizational culture should not be forced on employees, because that approach can easily make them feel burdened, leading to a failure to reach the desired result. Unless employees conjure a strong willingness to see plans through that they themselves draw up when reflecting on what they want to do, they will not be able to cope with complex environmental changes and challenges.

Recently, I started seeing the generation that will be responsible for future corporate management take a cool- headed look at the state of the Tsumura Group and make suggestions with a sense of crisis and urgency. Most of the time, I give them an immediate green light, saying, “Let’s do it now,” and support their constructive and innovative enthusiasm.

The results of our annual Corporate Philosophy survey among Group employees have been positive, giving me hope for us taking a major stride in organizational reform based on a shared understanding.

Promoting Multi-Pillar Operations with More Effective Board Oversight

Board of Directors Working on Six Priority Themes

In writing our second medium-term management plan, the Board of Directors spent hours discussing sustainable growth of the domestic business, foundation-building for the China business, our current top priority, and the effects of capital investment.

For fiscal 2025, the board has selected six priority themes (see below) and will reinforce its oversight function through them. We continue asking our outside directors to discuss and advise from their multifaceted viewpoints, with consideration for the characteristics of the Kampo market and our China business. As CEO, I plan to encourage comprehensive discussions while correcting the asymmetry of internal and external information. We promote multi-pillar operations rather than simple diversification, specifically working to build up the China business and the domestic healthcare business as our second and third business pillars beside the core prescription Kampo medicine business, which we will grow into a bigger pillar. Speed matters, so we are looking at all the possible choices on the table, including technology and/or business alliances with other companies.

There is major value in the Tsumura Group’s initiatives that offer personalized Kampo treatments leaving no patient behind, businesses that support each person through their life stages, and scientific elucidation of pre-symptomatic disorders. The most important factor in accomplishing these and sharpening our competitive edge is materiality. In our second medium-term management plan, we will link the material items “nature” and “health” with five groupwide strategic challenges and take a scientific approach to creating value we can share with society while reinforcing our management foundation.

New Value to Meet the Global Challenge of Societal Aging

Japan leads the rest of the world in entering the phase of a super-aged society. We expect to see continuing growth in the ratio of seniors in populations as a global phenomenon, projecting the percentage of people over 65 to increase from 9.4% in 2020 to 18.7%*5 by 2060. In treating seniors experiencing complex health issues, we understand that Kampo and traditional Chinese medicines, which are multi- component formulations derived from natural substances, have real value. Evidence-based Kampo treatment, which the Tsumura Group is working to establish, should make a major contribution to the proliferation and progress of traditional medical practices worldwide.

We dream of becoming a world-leading manufacturer of pharmaceuticals made from natural substances. The global operations of the Tsumura Group go beyond simple imports, exports, and overseas sales. We carefully protect the deep- rooted medicinal traditions of each nation and region, and through the business of supplying pharmaceuticals that are rigorously safe, efficacious, and of uniform quality, we plan to contribute to the health of as many people as possible while meeting the needs of healthcare providers. Resolved by our Purpose, “Lively Living for Everyone,” we of the Tsumura Group will continue pursuing our long journey step by step, with our eyes on the summit.

• *5 Source: The Cabinet Office, “Annual Report on the Aging Society 2024”